Good morning. My name is [Dennis] and I will be your conference operator today. At this time I would like to welcome everyone to the Nokia first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator instructions) I will now turn the call over to Mr. Kristian Pullola, Vice President, Head of Treasury and Investor Relations. Sir, you may begin your conference.

Ladies and gentlemen, welcome to Nokia's first quarter 2010 conference call. I'm Kristian Pullola, Head of Nokia Investor Relations; Olli-Pekka Kallasvuo, CEO; and, Timo Ihamuotila, CFO of Nokia are here in [Espo] with me today. During this briefing and call, we will be making forward-looking statements regarding the future business and financial performance of Nokia and its industry. These statements are predictions that involve risks and uncertainties. Actual results may therefore materially differ from the results currently expected. Factors that could cause such differences can be both external, such as general, economic, and industry conditions as well as internal operating factors. We have identified these in more detail on pages 11 to 32 in our 2009 20-F and in our press release issued today. Our aim is to finish this call in approximately one hour. To view the supporting slides while listening to the call, please go to the IR Web site. Please note that today's press release and this presentation includes non-IFRS results information in addition to the reported results information. Our quarterly results release includes a detailed explanation of the content of the non-IFRS information as well as a reconciliation between the two. With that, Olli-Pekka, please go ahead.

Thank you, Kristian. Good morning and good afternoon. I know there will be a lot of sort of interest today to discuss the guidance we have given today and Timo will talk about that in a moment. But before that, I will go through the operational update. So please bear with me for some time. In Q1 Nokia delivered revenue and earnings growth on a year-over-year basis. Although the competitive environment remains tough, the economic headwinds we faced last year have eased and the macro outlook is more supportive. Despite challenges at the high end of our device portfolio, Nokia delivered results in line with our guidance. In our Devices & Services business Nokia continued to show solid smartphone momentum in lower price points. In the seasonally slow Q1 we grew our converged mobile device units [read] smartphones on a sequential basis and increased our estimated converged mobile device volume market share. We have made good progress in this strategic area and we are capitalizing on our unique capability to bring the benefits of smartphones to the mass market globally. Our high-end portfolio renewal is linked to the key 2010 operational milestones we communicated during our Capital Markets Day last December. We are highly focused on execution to insure our new offerings are a success. We are working hard to deliver a family of Symbian^3 devices that are targeted to offer a clearly improved user experience, a high standard of quality and a competitive value to consumers. You can expect the first Symbian^3 device to launch in Q2 and ship in Q3, first to the open channel as normal and then to the operators. While this is somewhat later than our original internal plan, it is really most important to get the quality and the user experience right; and compared…

Thank you, Olli-Pekka. I will start by taking you through the Q1 financial highlights for Devices & Services. On a reported basis, Devices & Services net sales of EUR 6.7 billion were down 19% sequentially and up 8% year-over-year. The sequential decline in net sales was mainly driven by seasonality as well as the competitive environment. On a constant currency basis, Devices & Services net sales were down 19% sequentially and up 7% year-over-year. So, as you can see, the currency impact on the top line was insignificant because of our hedging. We ended Q1 with normal channel investor inventories of four to six weeks. Industry price competition continued to be very robust in Q1 as expected. Nokia's Device ASP in Q1 was EUR 62 including Services down EUR 2 sequentially. On a sequential basis our Device ASP decline was driven by price pressure particularly in certain high-end smartphones, offset to some extent by a positive mix shift from mobile phones to converged mobile devices. As mentioned earlier, we are now including Services in our ASP numbers. In Q1 our converged mobile device ASP was EUR 155 compared to an ASP of EUR 186 in Q4. The sharp decline in converged mobile device ASP was mainly driven by mix, consistent with our strategy to bring smartphones to lower price points. In addition, as said earlier, we saw price pressure in certain high-end products. Mobile phones ASP was EUR 39 in Q1 compared to an ASP of EUR 40 in Q4. In Q1 Services net sales were EUR 148 million, down 12% sequentially. The decline was driven by our inclusion of our navigation offering with our smartphones. This business model has extended the average duration of our Maps licenses leading to revenue recognition over a longer period of time. Billings were…

Thank you, Timo. The Symbian^3 product cycle is very important for Nokia and we will not ship the first device before it is ready. With our Symbian^3 devices we intend to improve our position at the high-end of the market. I am confident that we will succeed. The timing of when we begin volume shipments of Symbian^3 devices will have an impact on our 2010 numbers and it's reflected in our updated annual guidance. Nevertheless, I am confident that we will deliver substance of progress in 2010. We plan to start shipping our first Symbian^3 device close to our original milestone date and this should allow us to end the year with positive momentum. To continue the momentum in 2011 we remain on track with our planned end-of-the-year MeeGo product milestone. Our opportunities and our ambitions remain fully intact and even today I can say our determination has only increased. Thank you.

Thank you, Olli-Pekka. We will now continue with our Q&A session. Please limit yourself to one question only. Operator, please go ahead.

(Operator instructions) Your first question comes from the line of James Dobson - Morgan Stanley.

I had a question about Symbian^3 and 4. It's got a couple of parts to it. I wonder if you could maybe just explain to us the reasons for the delays that we should know about. Then I think as a secondary point, I think, what real big improvements do you think these new iterations of Symbian will give to you when you're up against the modern operating systems like Android and the Apple OS? Do you think that Symbian^3 and 4 can narrow the gap or not?

Olli-Pekka here, so I will take that one. I think there are two kinds of delays when it comes to market dynamics. One way to look at that is something delayed from the overall competitive dynamics point of view and the other one is something delayed from the internal milestone point of view. I think we are here talking about the latter. To cut it really short -- and maybe I should not cut it short -- but, nevertheless, we will not ship the product before the quality is something that will meet the end user needs and demands. So the consumer experience from the quality point of view needs to be there. So it's a painful thing to delay something a bit. I definitely am aware of that. It's painful but at the same time meeting the quality requirements is the right thing to do as well and is in everybody's interest. So this is basically we just want to ship a product that really will make it in the -- products that will make it in the marketplace. Of course, when we are talking about Symbian^3 we are talking about the lineup of products, not one product only. Then when it comes to the latter part of your question here, so I think this simply will be more intuitive, more fun and faster and definitely can, in my opinion, meet the market best. Now I'm talking about Symbian^3 here. Then I'm saying I'm confident on that one. Of course, this is an area where we have been working together with many industry participants, so this has not happened in isolation inside Nokia. We have been working with basically all the major operators in this world who, of course, have access to what is there to come from our competitors as well. In fact, the feedback here has been extremely good. So I'm really -- that's, of course, -- it needs to be noted here on the positive side. Then Symbian^4 is something that is planned to have an incremental improvement on Symbian^3. But from a sort of development dynamics point of view, I think it's quite important to understand that the heavy lifting here is happening with Symbian^3. So that's really been the one we have been working long and hard with in order to really sort of bridge the gap or close the gap we have had since the high end to the competition. So this is not something that would have happened in the course of the spring. We have been working hard and heavy lifting in order to make that happen and now we are very close in fact to that happening. Then Symbian^4, in fact, will be a much smaller increment from the development point of view on that one, not heavy lifting in the same way. But we believe that we can enhance the consumer experience even more with that.

Interesting. When you say more intuitive and fun is there anything specific you can talk about that will help us judge what Symbian^3 can mean for your business because it's reasonably critical, as you say.

Yes, kind of more intuitive means it's easier to use and you're really feel it's more straightforward and more intuitive and I think it can be fun, as well, when you look at the different functionality. But we have not introduced a product here as of yet and so that will happen. Stay tuned. But I'm talking about Symbian^3 in general.

Maybe a comment that you have seen the demos and the usability is really improving significantly regarding the basic touch usability and then we further have Flash report for the product, which is very good for video and these are really the key usability improvements.

What I'm really referring here to the sort of operator sort of feedback and response because that, I believe, here these people know what the [inter-market plays].

I promise to be two seconds. So, as Olli-Pekka says, we follow these as [one KPI], this operator ranging for product and that metric is actually very positive for these devices.

Next question please.

Your next question comes from the line of Mike Walkley - Piper Jaffray.

Just following up on that question with the large sequential drop in converged device ASPs, can you walk us through some of the variables for that drop? You talked about sharp price declines in some high-end products and mix. Can you maybe break it out between the two for us? Then, as you launch Symbian^3 products and you need to extend your smartphone portfolio, would Symbian^3 potentially raise your converged device ASPs in the back half of the year or is it more going to the mid tier and ASPs should continue to fall from current levels?

This is Olli-Pekka here. So, again, if I try to make the point simplified a bit and Timo then can make it more complex and give sort of more better answer. In my opinion, it's simply the 5230 entering the portfolio. A product that we really didn't have there in Q4 selling in big volumes to markets where smartphones have not been as of yet, so taking market share from feature phones, basically. That one product here, big volumes, the right price volume has had an impact. Of course, the price competition has been there. We acknowledge that but it's really if I simplify this one product. Now then when it comes to Symbian^3, obviously I spoke about already, about the fact that it's something where we intend to close the gap in the high end of the marketplace, of course, starting to also then take it lower in the price point as well with different types of products. But, of course, this for some time, for a relatively long time, will remain a higher-end lineup. I mean, by definition we will have - excuse me - an increasing impact on the ASP without a [inaudible] to the ASP development in general because it also depends on how successful we are in the lower end of this model.

Next question, please.

Your next question comes from the line of Gareth Jenkins - UBS.

I've got a couple of very quick ones, if I could. Just in terms of the guidance shared for the rest of the year, could you maybe distill that into the component parts of, A, what you've seen already in terms of competition in Asia and, B, how much of it is Symbian^3 delay? So it sounds like Symbian^3 really won't have a material impact until Q4. Then just secondly and I guess related to that, on Symbian^3 and just Sybmian generally, do you feel that the fact that it's a foundation and that you are effectively doing consensus decision making along with the operators is actually slowing the process down and that maybe it would be better to internalize some of this development?

This is Timo here. Maybe I'll start with gross margin part or, sorry, on the operating margin guidance part for the full year. So clearly we now came out with our result at 12.1% and we are guiding between 9% and 12% for Q2. So that itself is having impact on the overall full-year number. Then when you were asking how does the Symbian^3 product actually affect that, so it is not only that they would have an impact on Q4. The impact will be there already in Q3 but then there are other dynamics like the pricing pressure and also the FX impact which will roll off after Q1.

Yes, and I'll take the latter part about the operator dynamics here. So in this business you typically work in two ways. You make the so-called plane vanilla version of a device that you sell in the open market, which will not require operator customization and stuff like that. Of course, that's independent of the operator corporation that we are going to do here with Symbian^3 as well. But with the open channel you can only reach a certain part of the market. So in order to really go for high market shares you need to, of course, have the operator's report and ranging as well and that will always, from anybody, require certain adaptation work for the needs of that operator. Here we are, of course, working with them. But, as such, it's not slowing down the plane vanilla, which is independent of that. I was referring to the operator feedback we have had when we have been discussing the ranging sort of public with them.

Next question, please.

Your next question is from the line of Mark Sue - RBC Capital Market.

From a defensive position, is there some assurance that it's just a one-time increase in expenses as you catch up to competitors? If competitors move forward as well does it become a perpetual game of catchup with Symbian^3 and does that mean more spending to close the gap later on with Symbian^4? Should we see it as a catchup or can we see it as a leapfrog platform? Philosophically, Olli-Pekka, if you could just give us your thoughts of whether Nokia can be big and fast or just big.

Yes, philosophically, one needs to be fast and big here. It's one wants to go for the market share and for the market leadership as well and that needs to remain the thinking. That, of course, needs to show in how we work. I think we've got a lot of solutions there, partly implemented, partly to be implemented. But philosophically, yes, I think that's a necessity. The question is then sort of how well you succeed with that. I have no sort of doubt in my mind on that one. Then when it comes to the first part of your question, so, like I said, when we are talking about Symbian, Symbian^3 has been, like I said, the heavy lifting and that has been really in the focus for some time here. In fact, we really have cleared space for Symbian^3 from the investment point of view. Hence, in fact, you have seen a relative sort of - you have not seen product introductions during the last, I would say, six months in the way we could have done without having this, as you can call it, the catchup investment, the heavy-lifting part. Once we have gotten there, Symbian^3 is a smaller increment. At the same time, I need to point out that we are not working in the high-end with Symbian only but really going even for higher end with MeeGo and that's, of course, a substantial investment that we have been making and we will continue to make and not increase in the overall spend here. Like I said, we expect, also that we are on track to deliver during the course of this year as well in the highest end with MeeGo. I think the opportunity here, although it was not asked, to mention that the response we have gotten from different type of market participants, again, including the operators here for MeeGo has been tremendous. The openness here and the credibility of Intel and Nokia combined driving that as well as the fact that MeeGo extends a wide variety of device pipes, connected TVs in car and so forth, is very attractive to operators who have these type of strategies. In that way, when we are discussing Symbian, yes, extremely important and we are extremely committed. But at the same time we need to mention that the highest end MeeGo will be extremely well [advancement].

Maybe I'll quickly comment from the OpEx side. So we are continuing to expect EUR 5.7 billion of OpEx for this year and we are not expecting that Symbian going forward would somehow have a significant need to increase OpEx past that either. I would also like to highlight that as we discussed about our operating margin guidance, so there are some items clearly which are taking it down, what we discussed. We feel that now is the right time to continue to invest at this level to really make sure that we have a quality release out when the Symbian^3 products come out. But longer term we have not changed our view on the fact that when we look at the split between [securitization], OpEx and sales and marketing OpEx we need to move further towards sales and marketing and continue to improve efficiency in the R&D OpEx and we can do that with Symbian.

Next question, please.

Your next question is from the line of Kai Korschel - Deutsche Bank.

I have two questions. The first one is on the operating leverage. Now, I believe [week] last you said that roughly 90% of CM [cost] is variable. If there is no improvement in the mix shift in the second half from Symbian^3, how should we think about the gross margin dynamics in the second half? My second question is on NSN. I think you were quite positive on engine CapEx, so do you actually expect an absolute rise in CapEx on the back of 3G rollout?

This is Timo here. Maybe I'll start with the first question, which is basically about the gross margin dynamics for second half and the operating leverage there. We are coming with a very competitive lineup but, of course, we have to plan, and it's the right thing for the company to plan to really gain share on that higher end of the smartphone market. Really, when you look at our guidance, this is exactly how you have to look at it there.

I'll take the other [the other one]. So we did not change at this point of time our estimate for the full year, flat market in Euro terms, although there are some differences between different markets here. Of course, there is quite a lot of sort of needs for the operators to invest as really the capacity needs in the networks continue to increase. But our sort of estimate continues to be flat Euro terms this year.

Next question, please.

Your next question comes from the line of Ittai Kidron - Oppenheimer.

I wanted to get back into the delay of Symbian^3 again. Can you give us a little bit more color? Was this hardware or software related? What I'm trying to get into was whether this delay also delays the proliferation of Symbian^3 across multiple hardware, across multiple devices or is it just limited to the hardware of that specific device you were going to come out with? So if it's software I would assume that it delays all of your [orders] for all of the other products as well that are using it. Am I thinking about this correctly?

No, in fact, if it's software, once the software is ready, we, of course, can take it to new devices as well. In fact, if I'm saying here that the first Symbian^3 device is delayed, in fact, the second Symbian device is delayed less than the first one because once we get there we can then do that one. But I'm talking about sort of different form factors, different type of devices.

Yes, I would say that one of the strengths of the Symbian platform is exactly the fact that when we then get the release we have a possibility to have a portfolio product pretty fast and we expect to have not only one product during second half but products on the market.

Next question, please.

Your next question will come from the line of Andrew Griffin - Bank of America Merrill Lynch.

Another Symbian^3 question, roughly speaking, how many products do you expect to have out by the end of the year? What sort of price points are you targeting and are there any more Series 60 phones to come or is everything going to be Symbian^3 from now on?

Well, maybe as a qualifier and comment first, so Symbian and Series 60 are finally united now in our language, so we shouldn't look at them in different. The fact that we are putting, of course rightly so, so much emphasis on the Symbian^3 products now does not take away the fact that there is possibility to use the previous release as well, particularly maybe in lower price points. So in that sense we are not saying that there would be nothing else coming than Symbian^3 products. The flexibility of Symbian really allows us to bring products for different price points and different purposes on the market.

I think that was more than a qualifier. I think it was the answer as well.

In terms of the number of products you're expecting to have Symbian^3, roughly speaking?

I don't know. I said products. I don't know if you want to shed more light into this.

No, we don't want to make that type of announcement yet.

I guess the last one was on the price points of Symbian^3 specifically. You said it's targeted at high end but would there be any more feature phone type price point Symbian^3 products by the end of the year?

It will remain relatively high end and, yes, it will remain relative - not the highest end. Really the highest end - highest, highest, highest - we are doing with MeeGo but Symbian will be really in the high end as well. Like I said, taking down the ASP there will not happen instantaneously, of course. You need to sort of have a reason why every product. In other words, Symbian will continue as well, like Timo said.

Next question please.

Your next question comes from the line of Phil Cusick - Macquarie.

As I think about Symbian^3 being delayed, can you talk to me about why then are you delaying Symbian^4? Are you taking talent off of the sort of 4 process and putting it on 3 so the 4 development process is delayed? Then what's your plan around the hardware that was going to be on Symbian^4? Do you think you still launch the same, hence that's on the same timing but some will be enabled with Symbian^3 instead of 4 sort of late this year or next year? Or do you delay there? Then just a quick follow-up; there's some chatter that ARM could be acquired by Apple. I wonder if you have any thoughts on that and how that might impact you.

Yes, we in fact believe, looking at the market conditions here, that the Symbian^3 - sorry, I've been coughing for five weeks now and I'm losing my voice a bit. Sorry about that. We really believe the Symbian^3 will be competitive not only this year but going forward next year as well. This is really a sort of an optimization point of view. When do you take what type of versions to the marketplace and how? Looking at what we can do with Symbian^3, during the last part of the year bearing in mind the MeeGo investment as well, we really don't feel we are in a position where we really would need Symbian^4 this year. So in that way it really is a lot like sort of how to make the market calls in the best possible ways. I don't want to take stand to the hardware side here because it relates to choices between different windows. I don't think I'm in a position to do that. I think in fact [QuoCom] in yesterday's call didn't go anywhere when they got the same type of question from their investors. This ARM, Apple, I really am not in a position to have an opinion on that.

Next question please.

Your next question is from the line of Kulbinder Garcha - Credit Suisse.

I have a question and clarification. My question is a bit more strategic, Olli-Pekka. It seems that your market share from a volume point view and Devices now 33%. It could be lower given how difficult it is to estimate the size of this market. I am wondering what you have to do to get your volume share back up. Is it a matter of this is no longer as relevant in this industry? Or where in this lower end part of the market where there have been some underestimation of it, do you have to price more aggressively? Is that really built into your guidance, this kind of a lower end more aggressive pricing scenario to sustain or even expand your lower end volumes and share? For Timo my clarification really is, so your EBIT market this quarter if you didn't have the currency impact, the positive [ForEx] would have been about 10.5% if I understood you correctly. What worries me is if I look at Q2 I don't think there's much OpEx really to go down to sales. The mix is getting worse. You've got no new products. I'm kind of at a loss as to how you can even get to mid-point of your margin guidance to Q2.

You can start, Timo, if you want.

I don't really have that much to add to this. This is simply the guidance what we are giving and of course this is where we expect to get taken into account the pricing dynamics on the market and the mix shift as well. We are also introducing new products in Q2 like the C3 lowest QWERTY device, so there is some newness coming into the portfolio as well. So I wouldn't exactly say that there is nothing coming. Of course, we are trying to improve the portfolio all the time and besides that we are bringing the new navigation, the included navigation into the sales context during Q2 as well. That will drive demand for our smartphones.

So if those products sell well Timo, just so I understand it, how well they sell determines whether you have the upper end or the lower end of the range. Is that the right way of thinking of things?

These were just some examples of dynamics which work to the opposite direction of what you said yourself.

I think Timo was making a great point here when he talked about the navigation. So now that we are really putting the turn-by-turn navigation into many devices, so in fact we are upgrading the total portfolio of navigation compatible devices. Baring in mind the way the market has responded to the turn-by-turn, now in the former downloads but in the Q2 in the form of preloads, that's like uplifting or elevating your full portfolio to a higher level from the consumer interest point of view. So we also need to look at not only the devices in terms of the hardware or the form factor but one competitor has well illustrated depending on what you include there in terms of content, services, software even after the launch. Then to your strategic question, the first part of your question, I don’t have any doubt in my mind that we need to and we can continue to be strong in the low end as well as the low, mid-tier. Yes, indeed, what you said about the market size being difficult to estimate. We definitely have come up with our best effort on the market size based on the new data analysis we can do. There's a lot of business here. Of course from a competitive dynamics point of view, it's very different from the smartphone business. Hence we have put in a dedicated team to really attack that market. In fact, the market dynamics here are quite interesting and different as well. You take India as an example. We are now launching the 2690 because the low price memory card device that's something that the Indian market requires and it will give us ammunition to really fight aggressively. Also the Dual Sim which is an Indian [phone]. We will come out with a device relatively soon. Indonesia, another type of market where it's in fact very much messaging driven and a very interesting market, messaging driven, complete like no other developing market. The product that we are now launching, C2, will be extremely important in Indonesia so far in the messaging front, whereas our E63 simply has been too expensive from the price point of view, so very important. There's quite a lot of dynamics here as well and I really believe you can continue to be strong in high end and low end and in between as well. But it will require different battle strategies, dedicated teams and completely different type sort of aggressiveness when it comes to your cost base.

And just to highlight that Olli-Pekka did not launch a new product on even lower price point with C2. So we actually launched C3. So I just wanted to -- .

C3.

Kulbinder, one more thing which I forgot to ask, that we are now at EUR 6.7 billion net sales. We are guiding EUR 6.7 billion to EUR 7.2 billion, so we are also expecting some leverage from simply the higher sales into the final, let's call it fixed cost part of the variable cost, i.e. the production cost will be simply as expected to spread to more products. So there is slight impact possibly on that as well.

Let's, Operator, take one final question.

Thank you. The next question is from the line of Pierre Ferragu with Bernstein. Pierre, your line is open. Pierre's line is no longer -- .

Thank you, Operator. So, ladies and gentlemen, that then concludes our call. I would like to remind you that during in the conference call today, we have made a number of forward-looking statements that involve risk and uncertainties. Actual results may therefore differ materially from the results currently expected. Factors that could cause such differences can be both external such as general economic and industry conditions as well as internal operating factors. We have identified these in more detail on pages 11 to 32 in our 2009 20-F and our press release issued today. Thank you.

Ladies and gentlemen, this concludes the Nokia first quarter 2010 earnings conference call. You may now disconnect.